United colors of GlobalHue: Don Coleman has positioned his agency to make a play on markets of every stripe and color
On a blustery March afternoon Don Coleman, 51 sits behind his spacious desk in his Southfield, Michigan, headquarters and collects his thoughts. Meetings with creative teams, finance staff, and clients crowd today’s agenda. The next few days will find him on the road, holding even more meetings in Philadelphia and New York.
Rising to his full height of six feet, three inches, the 245-pound former linebacker heads to a conference room where crystalline municipal and charitable awards rest beside University of Michigan football memorabilia. On bookshelves, one can find a 400-plus page hardcover copy of The Vibe History of Hip-Hop sandwiched between other titles like Profit Patterns and Quotable Business. Such diverse interests might seem out of place in other corporate offices, but these elements blend together seamlessly at GlobalHue (No. 1 on the BE ADVERTISING AGENCIES list with $350 million in billings)–the advertising agency where Coleman conducts business, as he works toward his vision of creating a multicultural marketing powerhouse.
And he’s well on his way. With clients that include Chrysler, Verizon Wireless, American Airlines, Miller Brewing Co., and Johnson & Johnson, GlobalHue is a full-service advertising agency to the entire multicultural market. In addition to targeting different ethnic groups, the agency focuses on the urban, young adult, gay, and transgender markets. With offices in New York Miami, San Antonio, and Los Angeles, the firm is positioned in the main geographic areas where most minority populations reside.
Formerly Don Coleman Advertising (DCA), GlobalHue posted 2002 billings of $350 million, a 6% gain over the $330 million billed in 2001–all during one of the most brutal advertising environments on record. The new name, which took effect in 2002, reflects DCA’s acquisition of Montemayor y Asociados, a San Antonio-based Hispanic advertising agency with nearly $90 million in annual billings, and Innovasia, a Los Angeles-based Asian American advertising agency with an estimated $20 million in billings.
Why reinvent an already successful business? The answer is clear after looking at America’s changing demographics. According to the 2000 census, African Americans, Hispanics, and Asian Americans will represent 40% of the U.S. population by 2020. Spending power among minority groups is expected to exceed $2 trillion by 2007–$852.8 billion for African Americans, $454.9 billion for Asian Americans, and $926.1 billion for Hispanics, according to the Selig Center for Economic Growth, a research arm of the University of Georgia. This growth is attributed to population increases as well as rising income levels. “We’re talking about populations that are now 37% of this country [and] are growing at seven times the rate of the white population,” points out Coleman, who says by 2010, over 50% of all people in this country under 21 will fall within this category of consumer: “So marketers are seeing that this is no fad, this is for real.”
Despite their surging numbers, less than half the Fortune 1000 companies actively market to this sector. As spending power among minority groups increases, it’s likely that more corporate giants will allocate advertising dollars in this area–making the multicultural segment a true emerging market. “I definitely think this industry is just scratching the surface,” says Corliss Green Thornton, associate professor of marketing at the Robinson College of Business at Georgia State University. “There’s a lot more work to be done in this area.”
As chairman and CEO of GlobalHue, Coleman is positioning his firm on the forefront of this burgeoning sector. The company’s demonstrated ability to remake itself and grow in today’s harsh business climate has earned GlobalHue its selection as the 2003 BE Advertising Agency of the Year.
FROM THE GRIDIRON TO MADISON AVENUE
The road to becoming an advertising executive began when Coleman was still in the National Football League. While on injured reserve, Coleman, who holds an undergraduate degree in journalism from the University of Michigan, attended classes at Hofstra University, eventually receiving an M.B.A. in marketing. He wound up playing four seasons with the New Orleans Saints and New York Jets until knee injuries permanently sidelined him in 1977. Landing a position at Warren, Michigan-based Campbell-Ewald Advertising, Coleman worked his way up the ranks, eventually becoming a vice president. In the ’80s, he left that firm to work at Burrell Advertising where he learned about target marketing.
By 1988, he decided to venture out on his own and formed DCA, which consistently ranked among the nation’s largest black-owned agencies. Coleman joins serial entrepreneur Don Barden of Barden Companies Inc. (see “The House Always Wins,” this issue) as CEO of a BE 100s company that has twice earned the distinction of being a company of the year. In 1998, DCA was named BE Advertising Agency of the Year for its innovative approach to gaining market share.
THE MOVE TO MULTICULTURAL MARKETING
GlobalHue attained much of its growth by increasing the number of services offered as well as employing stringent cost-control measures. “We got more [involved in] events and promotions, the Internet, customer relationship marketing, and custom publishing,” Coleman says. “So we branched out and provided more services for our clients, which kept us in the game.” Cost-control measures included managing expenses that can’t be billed back to the client, such as an unauthorized lunch or plane ticket. “All these things add up,” Coleman notes.
Although analysts attribute the 2000 census data to the growth in multicultural advertising spending, Coleman began creating his one-stop shop for multicultural marketing in 1999 when he entered talks to combine DCA, a specialist in urban marketing, with Montemayor. “Don and I had some conversations about [DCA] buying us out,” says Carlos Montemayor, now a vice chairman with GlobalHue and president of its Hispanic operations. “In order to diversify our efforts, we decided to sell our company.”
The merger with Montemayor turned out to be fortuitous when, later in 2000, DaimlerChrysler restructured its sales and marketing teams and initiated a review of the auto giant’s operations within these areas, including its choice of advertising agency. Numerous presentations were made to the incoming management. Coleman’s agency had to compete with some 60 other agencies for the $40 million account. Chrysler was looking for one advertising agency that could reach a host of American subcultures rather than a number of agencies–each targeting a specific market segment. Coleman’s selling point was that his agency would soon be positioned to fully handle multicultural marketing–just what the auto manufacturer was looking for.
The four-month process frazzled nerves at the agency, especially when the review was extended and the number of agencies vying for the business narrowed. “What little hair I have left turned grayer,” says Montemayor, with a chuckle. “Even though with the melding of the two agencies, we could have survived a Chrysler loss … I was very nervous.”
While the review dragged on, Coleman looked to further enhance his agency’s multicultural image with Chrysler and other clients. He began talks to acquire Innovasia, one of the nation’s premier Asian American advertising agencies, with clients that included General Motors, Union Bank UPS, and Korean Air. “Don Coleman had approached us and started talking to me about his long-term vision, where he saw marketing going, and how he envisioned the marketing paradigm shifting from the general market toward the ethnic markets,” recalls Elcid Choi, Innovasia’s former chief, who now serves as a GlobalHue vice chairman and president of Asian American operations.
When all was said and done, Don Coleman’s agency not only retained the account, but Chrysler increased ad spending from $40 million to some $140 million. “The review was basically centered around the direction we were moving in anyway–a multiplicity of services under one roof,” says Coleman, who completed the acquisition of Innovasia upon retention of the Chrysler account.
Now consolidated, GlobalHue faces challenges aplenty. Among them is how to gain market share in an environment in which larger general market agencies are increasingly delving into the multicultural market. “The pressure doesn’t stop,” says Montemayor. “As the [marketing] budgets grow, so does the pressure from that particular sector.”
In order to compete amidst that pressure, GlobalHue’s team plays to its strengths. “We’re specialists,” points out Choi. “A general market agency is good at reaching the masses–a population that’s very homogenized. They all look at the same type of media, but the diversity markets, by definition, are specialized. And if you want to reach a specialized market, you have to bring specialists in.”
Another issue is the minority stake that publicly traded Interpublic Group of Companies Inc. holds in GlobalHue. In October 1999, Coleman sold a 49% stake in DCA to Chicago-based True North Communications as part of a deal that created New America Strategies Group–a multicultural group of agencies that consisted of DCA, SiboneyUSA, a Hispanic agency, and Imada Wong Communications Group, which focuses on Asian American consumers. By 2001, Interpublic had acquired True North in a stock swap valued at some $2.1 billion. (Coleman would not disclose the substance of his talks with Interpublic.)
One of Coleman’s more recent collaborations is with hip-hop impresario Russell Simmons, CEO of Bush Communications (No. 14 on the BE INDUSTRIAL/SERVICE 100 list with $260 million in revenues), who serves as a consultant. “He’s certainly our connection to music and the hip-hop community,” says Coleman. “He’s very influential all over the country in terms of knowing and advising people, and opening the doors for potential new business opportunities.”
Other observers agree. “The collaboration between Don Coleman’s GlobalHue and Russell Simmons is icing on the cake in terms of his capability to deliver urban audiences,” says Yvette Moyo, co-founder of the Marketing Opportunities in Business and Entertainment (MOBE) conference series. “With Russell Simmons’ Def Poetry Jam success and [his] high profile with the Ludacris/Pepsi situation, Don not only has direct daily involvement [with] a man [who] is the icon for the urban mind-set, but [who has contact] with some of the highest-profiled brand associations this year.”
Looking ahead, Coleman is in the process of starting a Hollywood-based division to provide product placement in films and examine co-branding opportunities. “So we’re looking at how we can get to the consumer with our message in more non-traditional ways,” says Coleman. “Because when you look at the advertising side–particularly television with the advent of TiVo (a digital video recorder), where people could potentially skip over commercials–you’ve got to [use] every distribution point to … make sure that our client’s brand message gets to consumers.”
In order to ensure that these messages get to America’s increasingly diverse consumers, Coleman will continue to keep his finger on the pulse of the multicultural market to identify trends and grab a larger slice of the urban marketing pie.
1998 $137 112
1999 $202 141
2000 $207 173
2001 $330 182
2002 $350 180
* MILLIONS OF DOLLARS, TO THE NEAREST THOUSAND. AS OF DEC. 3, 2002.
PREPARED BY B.E. RESEARCH. REVIEWED BY THE CERTIFIED PUBLIC ACCOUNTING
FIRM EDWARDS & CO.
Note: Table made from bar graph.
COPYRIGHT 2003 Earl G. Graves Publishing Co., Inc.
COPYRIGHT 2004 Gale Group